Home › Tools › Prime Cost Calculator
Free Tool · Restaurants & Bars

The 60-Second Prime Cost Check

Plug in last month's sales, cost of goods and labor. You'll see your prime cost percentage, how it splits between food and labor, and what one point of prime cost is worth to you over a year.

0%
prime cost as a share of sales
$0
prime cost
0%
cost of goods
0%
labor
Couldn't fill this in from your books in 60 seconds? That's the real finding. If invoices land in the wrong month, inventory never gets counted, or payroll sits in one lump, your prime cost is a guess. A bookkeeping cleanup fixes the history so the number means something. Estimate what a cleanup costs →
Walk through your numbers with Dan — free 15-min call →
Want your results in writing?

I'll email your prime cost breakdown so you can compare next month. No spam.

Educational estimate only. Target ranges are common industry rules of thumb, not a standard for your concept. Your numbers are only as accurate as the books behind them.

What prime cost is

Prime cost = cost of goods sold + total labor. Cost of goods is what you spent on the food and drinks you actually sold. Labor is every dollar of payroll: hourly staff, salaried managers and chefs, the employer side of payroll taxes, and benefits. Divide the total by sales and you have prime cost percentage.

It matters because these two lines are the biggest costs you can actually control week to week. Rent is fixed. Prime cost moves with every order guide, every schedule, and every comp.

What a good number looks like

The rule of thumb most operators use is 60% to 65% of sales or lower. Quick-service tends to run leaner, full-service tends to run higher. Don't chase one magic number. Watch your own trend month over month, and find out why when it jumps.

A number that looks too good is a flag too. It usually means something's missing: salaried managers left out of labor, payroll taxes never split from wages, or a big vendor invoice that hasn't been entered yet.

Why one point matters

Every point of prime cost is 1% of sales. On $100,000 a month in sales, one point is $1,000 a month, or $12,000 a year. The calculator shows that number for your own sales, which is usually the fastest way to see whether tightening an order guide or a schedule is worth the effort.

When the books can't give you the number

Most owners who try this hit the same wall: the inputs aren't in the books, or they're there but wrong. Invoices get posted when they're paid instead of when the food arrived. Inventory never gets counted. Liquor, food and paper goods sit in one expense account. Payroll comes in as one lump.

If that's you, monthly bookkeeping on top of messy history won't fix it. The history needs a cleanup first. That's a core service here, not an afterthought. See how it works in the catch-up and cleanup guide, or get a ballpark with the cleanup estimator.

Related reading: the complete restaurant bookkeeping guide, the bar and nightclub bookkeeping guide (pour cost and liquor inventory), the month-end close checklist, and what cost of goods sold means.

Prime cost FAQ

What is prime cost for a restaurant?
Prime cost is your cost of goods sold (food, beverage and anything else you sell) plus your total labor cost (hourly wages, salaries, payroll taxes and benefits) for the same period. Divide it by total sales to get prime cost percentage. It's the biggest controllable expense in a restaurant or bar, which is why operators watch it more closely than any other number.
What is a good prime cost percentage?
A common industry rule of thumb is to keep prime cost at or below about 60% to 65% of total sales. Quick-service concepts often run toward the lower end and full-service restaurants toward the higher end. Your right target depends on your concept, rent and menu, so the trend month over month matters more than hitting one exact number.
Should manager salaries and payroll taxes be included in prime cost?
Yes. Prime cost labor should include all hourly wages, salaried managers and kitchen staff, the employer share of payroll taxes, and benefits such as health insurance and workers' comp. Leaving out salaries or payroll taxes is one of the most common reasons a prime cost number looks better than it really is. Owner draws are usually tracked separately.
Why is my prime cost different from what my books show?
Usually because the books are behind or miscategorized. Common causes are vendor invoices posted in the wrong month, no inventory count at month end, food purchases mixed in with supplies or repairs, and payroll recorded as one lump sum without taxes split out. Prime cost is only as accurate as the books behind it, so a cleanup often changes the number.
How often should a restaurant calculate prime cost?
At minimum once a month, when the books close. Many operators also run a weekly version using purchases and scheduled labor so they can react before the month is over. Weekly numbers are rougher because inventory swings, so use them for direction and the monthly close for the real figure.